quote:spreads are massively wider than any currency exchange in the world.

oh, and before you go believing your buddy Russian about 4% spreads and stuff, just know that he's lying. you can go check out the exchanges for yourself if you want. hopefully people around here know that LSURussian lies enough so that they'll go check his numbers

re: Winklevoss Twins Plan First Fund For Bitcoins(Posted by LSURussian on 7/9/13 at 10:13 am to WikiTiger)

quote:oh, and before you go believing your buddy Russian about 4% spreads and stuff, just know that he's lying. you can go check out the exchanges for yourself if you want. hopefully people around here know that LSURussian lies enough so that they'll go check his numbers

re: Winklevoss Twins Plan First Fund For Bitcoins(Posted by LSURussian on 7/9/13 at 10:27 am to WikiTiger)

quote:I don't understand why people like LSURussian need to lie so much. What is he afraid of?

Now you've responded TWICE to me in this thread!

If you understood anything about currency exchange you would know the bid/ask shown on your screen shot is irrelevant for actual trading.

Just look at the last price at the top of the page, $70.794, which is OUTSIDE of the spread. I assume you have enough math skills to figure out how it's impossible for the last trade to be outside of a current valid bid/ask spread.

But then again, maybe you don't. Sucks to be you. Stick to your coding because you suck at finance.

ETA: And one other point... You make it sound like I can buy btc using dollars, send them to someone instantly and that counterparty can immediately turn around and sell the btc for dollars with no risk. You know you're lying.

On BTC-e, they specifically say it takes up to 24 hours for a transaction to be "reflected in your account." Then, they say in their FAQ section, "BTC-e executes all account withdrawals right away or in 1-2 days. Sometimes, it can take longer for the transactions to be carried out, but this is rare. Keep in mind, though, that depending on the type of transfer there can be a delay."

So 24 hours for the initial transaction to be reflected in the customer's account and up to 2 days more (or even longer "depending on the type of transfer") before the customer can withdraw his money.

It's convenient of you to not mention those delays. You probably don't even consider not telling the whole truth as being a lie.

quote: There is an optional transaction fee that you pay that will go to the miner who eventually processes your transaction. Right now the standard fee for a basic transaction is .0001 bitcoins, or $0.0075 dollars, however, no fee transactions are processed pretty quickly as well (although that will probably change as the amount of bitcoin transactions grow.

You're using "optional" loosely here. So you can incentivize a miner to place your trade in their block for execution, or you can't. I guess it would absolutely be optional but so is transacting at all, you have to pat people's backs to get them to help you out. That will never change regardless of the currency mechanism.

quote:You could not be more wrong here. The whole purpose of "miners" is to secure the network using proof of work. The bitcoin protocol is not lacking in security. Now, if you want to argue that third parties dealing in bitcoin lack security, then I'd say you're right.

A third party has to exist, especially at this point in time for bitcoin. Hell even in the future bitcoin will never get broad based acceptance without third party type payment mechanisms, and these third parties will want to get compensated. No matter what you're not going to avoid fees, I can't guarantee many things but I can absolutely guarantee this.

quote:oh, and before you go believing your buddy Russian about 4% spreads and stuff, just know that he's lying. you can go check out the exchanges for yourself if you want. hopefully people around here know that LSURussian lies enough so that they'll go check his numbers

I hate to break it to you, but even though it may not be 4% spreads Russian is right on this. You have to double you spreads to get to your total transaction cost expectations and that spread at the top of BTC-E is the best quoted bid/ask blocks which differ in size. Usually you'll never execute all of your order at the best quote even in the most liquid currency markets unless you're doing over-the-counter*. So you'll start laddering up the blocks which you can see start widening out pretty damn quickly.

I'm giving you the benefit of the doubt in this case as I know you aren't versed in finance. However those bitcoin spreads are tighter than anything else I've seen, and that reference bid/ask for the USD/EUR may be the widest I've ever seen. Ever. That's worse than a lot of loan shark style currency exchanges I've seen around NYC.

*I need to footnote this to high heaven but that would be a completely different thread.

quote:I hate to break it to you, but even though it may not be 4% spreads Russian is right on this

Hate to break it to you, but he's not.

quote:but even though it may not be 4%

first of all, why don't you call him out on his bull shite lies and deceit?

but not only that, LSURussian is so fricking stupid that he was likely confusing day high/low prices with bid/asks when he made his grand claim of 4%. Of course, he won't admit that.

quote:You have to double you spreads to get to your total transaction cost expectations

Fair enough. But if you do that with the numbers in the screenshot I posted earlier, it comes out to 3.18% or total (.6 twice for the spread, .99 twice for the conversion on each end).

You have a valid point, however, about being able to fill orders. Obviously right now in the bitcoin market, any large orders will effect the price. So, while the original scenario didn't specify a total price to be transferring, anything under a couple hundreds should be fine.

And finally, you and I both know that as the bitcoin market matures that this will become less and less of an issue.

And just for completeness, I just want to demonstrate how this could be done in real life right now and what the costs would be.

Scenario 1: Entity 1 already has bitcoins. Entity 2 wants US dollars. Entity 2 has an account with BitPay. Entity 2 requests Entity 1 to send $100 worth of bitcoin at current market prices. Entity 1 sends them (zero transaction fee through the bitcoin network, or if chosen, 0.0001 bitcoin fee). BitPay processes the transaction, charges Entity 2 0.99% and deposits the rest in US dollars in the Entity 2's bank account the next day.

Scenario 2: Entity 1 does not have bitcoins. Entity 2 ultimately wants US dollars. Entity 1 has an account on an exchange and has already funded it with US dollars. Entity 1 purchases the bitcoins (0.2% fee on BTC-e) and sends them to Entity 2. Entity 2 has an account on Coinbase, and sells those bitcoins on Coinbase for a 1% fee, and the US dollars will be deposited in Entity 2's bank account in 4-5 days.

There are many variations on this and you can mix and match many services.

The crux of this whole ridiculous debate however is y'alls insistence on returning to US dollars. And while that may be a concern now, the goal is that it won't be necessary.

I readily admit that converting to and from fiat adds greatly to the cost, but that's not a reflection on bitcoin at all, that's a (negative) reflection on the legacy money system and all it's difficulties and regulations.

Surely you can admit that bitcoin to bitcoin transactions are extremely cheap compared to traditional money transmitters, right?

quote:You're using "optional" loosely here. So you can incentivize a miner to place your trade in their block for execution, or you can't.

I say optional because right now it truly is optional. I have done many recent transactions with no fee and they get confirmed very quickly. Will it always be this way? Probably not. But even when fees do become de facto mandatory, they will still be very cheap, and the amount being sent is irrelevant, unlike with traditional transmitters. You can send $1 or $1,000,000 for the same amount in transaction fee in bitcoin.

quote:A third party has to exist, especially at this point in time for bitcoin. Hell even in the future bitcoin will never get broad based acceptance without third party type payment mechanisms, and these third parties will want to get compensated. No matter what you're not going to avoid fees, I can't guarantee many things but I can absolutely guarantee this.

I don't necessarily deny this. They will be convenience providers and they will get compensated for their services. The difference, however, is that the users at least have the option to DIY. For instance, a web site could write their own bitcoin processing software, or they could just use BitPay and pay the 0.99% fee. But at least they have a choice. Can I do that with credit cards?

quote:. Usually you'll never execute all of your order at the best quote even in the most liquid currency markets unless you're doing over-the-counter*. So you'll start laddering up the blocks which you can see start widening out pretty damn quickly.

Thanks, Benny. Good explanation.

The most common quantity of btc on the buy (bid) side on the exchange wiki pasted (BTC-E) is .01 btc.

That's right...a whopping order for 71 cents worth of bitcoin!

The message board that accompanies that website sarcastically calls those orders "bots" because their only purpose is an attempt to drive up the bid price for btc, thus skewing the actual spread and price for any usable quantity of btc.

The site I linked (LINK ) shows the bid/ask prices for a "meaningful quantity" of btc. Their designation of a meaningful quantity appears to fluctuate somewhere around 5.00 btc, although when the trading is VERY slow, I've seen it drop to 3.0 btc. That's the "ladder" of cumulative quantity of btc you're referring to.

And that 5.0 btc quantity on both the buy and sell side results in a spread of anywhere between 1.5% and 4% in USD prices.

As I type this the bid price is $72.26 and the ask price is $71.00, a price spread of $1.26, or a spread of 1.8%. And in this case, there are only 3.13 btc available to be traded at that spread so the spread is very narrow with such low volumes of buy/sell orders in place.

The activity is almost nil with only 6 transactions in the last 20 minutes. (That data is shown.) The total volume of btc traded in those 6 transactions = 5.67 btc.

So, you see, wiki, it's not a lie when I tell you what the "real" spread is. Learn from Benny's explanation and stop with the childish temper tantrums and name calling.